Mar. 23, 2016


Kuandyk Bishimbayev

Kazakhstan

Kuandyk Bishimbayev

CEO, Baiterek Holding

"Since the establishment of the Baiterek, we have made a concerted effort to attract foreign investment."

BIO

Kuandyk Bishimbayev was born in 1980 and graduated from the Kazakh State Management Academy with a specialty in international economic relations. He went on to study at the Management and Business School at the George Washington University in the US. He has held a number of high-level positions in finance and as an advisor to the government on economic issues. He is currently the CEO of Baiterek Holding.

Since its establishment in 2013, what have been the major achievements of the group?

When we were established, the government was looking to take the welfare decisions away from Samruk-Kazyna in order to reinvent and reactivate them. At Samruk, the development institutions were only a portion of the assets. Previously at Samruk, our focus was on industrial assets such as mining, oil and gas, railroads, the airline company, electricity, and chemicals. Development institutions were never the focus of management, although they play a critical role in the economy, especially during difficult economic times. The banking system was in bad shape because of the overwhelming debt burden; it was not functioning as it had prior to the 2008 crisis. The government took an active role of investing in the economy through various programs, and it created efficient instruments and institutions. The decision was to relieve Samruk of certain development institutions and establish a management company, which is our holding, and it will basically make them more efficient and more effective. When the government trusts in the effectiveness of these instruments, it invests through us by channeling government investment into the economy.

How are specific initiatives, particularly relating to the Roadmap 2020 and programs for the development of the region 2020, being driven?

We engage in many government programs that vary in size and scope. The industrial program has initiatives such as Kazakh National Development, the Development Bank of Kazakhstan, and the Investment Fund of Kazakhstan, all of whom play a critical role. We finance many industrial projects, as they provide various instruments, such as lines of credit, export financing, and credit insurance; we can also do equity investments and private equity investments. Because we posses this wide range of financial instruments and services, we can make tailor-made decisions and solutions for the needs of the entrepreneur or investors who want to invest in Kazakhstan. In terms of burgeoning sectors, the next big area is the development of SMEs. The government has tasked Baiterek with increasing the SME portion of GDP. When Baiterek was established, the contribution of SMEs to GDP was around 19%. Today, two-and-a half-years later, this figure has grown to 25%, and almost 75% of all the financing provided in 2015 to non-mining and non-service sectors of the economy for SMEs was provided by Baiterek Holding. When you take into account the banking system, private investors, and local private sources of the business owners who are reinvesting back into business, 75% of all investment channeled into SME development was provided by Baiterek. This shows the scale at which we are engaged and that the government recognizes that we have become an efficient instrument through which it can effect SME development. The third largest area is the housing program, which is related to the social aspects of government activity. We are the main operators in the regional development program of housing investments through our subsidiaries. Our task for this year is to renovate and complete 7,000 apartments across Kazakhstan.

How are your operations impacted by the $600 million infrastructure investment deal that was signed last month with CITIC from China?

Since the establishment of the Baiterek, we have made a concerted effort to attract foreign investment, and we were especially successful during President Nazarbayev's trip to China. We managed to sign investment deals that will bring almost $6.5 billion to Kazakhstan, some of which are coming from long-term soft credit lines, while others come from private direct investment. The $600 million fund that we signed with CITIC Capital is an example of when foreign investors use Baiterek as a reliable and stable partner; while they provide us with credit, they are also taking the business risk with us and establishing the fund that will make private equity investments both in Kazakhstan and in the region. The focus of the fund will be Kazakhstan, Customs Union countries, and Central Asia, and in terms of industries, the focus is on mining and logistics, agriculture, food processing, energy, and infrastructure. That is not the first fund that we established with CITIC; five years ago the first fund, CITIC Kazyna, was established with $200 million, and today it is fully invested. So CITIC had a positive experience in Kazakhstan and decided to go ahead with further and more significant investment. This $600 million is not the limit; our plan is to increase the fund to $1 billion and we have interest from other sovereign and private foreign funds that would like to join. We believe that in the next year we can actually increase the amount to $1 billion, and this will be significant.

What are your expectations for Baiterek in 2016?

The economic climate is volatile due to the drop in oil prices and the situation in Russia. Therefore, it is time for Baiterek to become a locomotive for the economy. This is the time when development institutions can show that they are capable of pushing the economy ahead, creating new jobs, and assisting business in their investments despite the current economic difficulties.

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